Abstract
In the academic field of international stock market, some critics argue that, after having a global financial crisis, stock markets around the world will become more integrated. In fact, many researchers have put forward empirical works showing that the co-relation, or Granger-Causality, among different stock markets, strengthens comparatively at the post crisis period. This finding is rational; however, the explanation given for the increased co-movement after the crisis is not sufficient. The critics suggest that this increase is caused by the increase in international arbitrage activities and the higher degree of integration among markets. The Purpose of this paper is to illustrate that the two explanations given are not adequate to explain the co movement of the markets. The researcher will therefore suggest a more reasonable explanation for the stronger post crisis co-movement, which is the unusual high sensitivity of investors to the international financial news.
Recommended Citation
Law, Y. (2010). Evidences of high sensitivity of investors to financial news after crises: Cases study of Asian financial crisis and sub-prime. Lingnan Journal of Banking, Finance and Economics, 2. Retrieved from http://commons.ln.edu.hk/ljbfe/vol2/iss1/1